Is Category Management Ready for AI?

AI Category Management

WITH THE ADVENT of Artificial Intelligence, Category Management is poised to get faster, more frequent, more connected and more accurate.

At least those are the promises we keep hearing from advocates of AI-powered decision tools: Your AI agent will access more and better data sources… Its decision tools will slash the duration of planning cycles… It will recommend actions in minutes that presently occupy countless hours for human merchants… It will plan and track personalized promotions with greater granularity… It will free human experts to focus more on strategy and less poring over spreadsheets.

If even some of this turns out to be true, CPGs could be facing some foundational changes in the way they collaborate with retailers to bring their products to market.

For Dr. Brian Harris, widely credited as the developer of the eight-step framework that solidified Category Management in 1997, AI holds the potential to re-animate a widely-used business process that has become a rote (plodding) exercise for many.

“Six months to develop a plan is no longer good enough. You need it within six weeks or even six days,” he said.

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Rise of the Retail Robots

rise of the retail robots

FRUSTRATED WITH STORE EMPLOYEES? Maybe a mechanical clerk is the answer.

The retail industry today is making some fascinating, promising, and perhaps troubling moves toward the routine use of autonomous retail robots in human environments. The efforts seem energized by technical advances, affordability gains, and increasing wages for their human counterparts.

“Everybody is beginning to talk about robotics as a way to remove labor from the system,” said David Marcotte, a senior vice president with consulting firm Kantar Retail, a friend of this blog, in an interview in the Star Tribune newspaper.

As a confirmed sci-fi geek (occasionally prone to paranoid fantasy), I’m both fascinated and a bit leery about this development. There’s little doubt, however, that the robots are coming to retail from numerous directions.

Tenser’s Three Laws of Retail Robotics:

1 – A retail robot may not harm, mislead or impede a shopper, or, through inaction, allow a shopper to fail to complete a sale or have an otherwise poor experience.

2 – A retail robot must faithfully implement the merchandising plans given it by retailers except where such orders would conflict with the First Law.

3 – A retail robot must encourage and protect the sale, as long as such protection does not conflict with the First or Second Law.

(Adapted with great reverence from i Robot, by Isaac Asimov.)

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Movin’ On Up

TENSER’S TIRADES HAS RELOCATED to this much finer neighborhood following a dispute with the old landlord.

You’ll find the entire blog (past and present) here, along with some useful new features.

If you subscribe to our RSS feed, you can update it using the link you will find at right.

Jamie Tenser

© Copyright 2012 James Tenser

Why In-Store Implementation Is the Next Frontier

I CALL IT the Paradox of Scale: Grocery chains keep getting bigger, but industry profit performance remains stagnant.

It’s been a doggedly persistent trend. Between 1992 and 2009, the top 20 U.S. grocery retailers increased their cumulative market share from 39% to 64%, according to the U.S. Economic Research Service. Meanwhile from 1996 to 2010, industry net profits have hovered consistently around 1% of sales, according to the Food Marketing Institute.

These facts seem to run counter to intuition. After all, bigger chains are supposed to have top-of-the-line executive talent, fine-tuned supply chains, advanced IT systems, greater buying clout and economies of scale. A deeper look reveals the paradox: Bigger chains also suffer from intensified store operational complexity, larger assortments and poorer visibility from the home office.

Bottom line – as chains expand, store performance management gets much, much harder. This begins to explain why out-of-stocks continue to run at 8.2%, unchanged in 15 years, yet 78% of items sell fewer than 3 units per week. It begins to explain why as many as half of all authorized in-store display promotions are never erected or erected late. It begins to explain why most retailers have no effective process in place to ensure or even monitor everyday planogram compliance.

A Rich Prize

Where some may find darkness and frustration in these statistics, others identify a golden opportunity. The In-Store Implementation Sharegroup identified tens of billions of dollars at stake – a rich prize indeed. Bold retailers and marketers who commit to improve retail compliance practices in the next few years should gain a distinct performance advantage over their less nimble competitors.

In-Store Implementation is not an isolated solution; it’s a multi-threaded initiative that incorporates improved in-store sensing and measurement; better inputs into planning processes; a performance-oriented culture; and alignment of trading partner resources. Many of the enabling practices and tools already exist, ad hoc. Still needed is an organizing principle that can tie them together into an effective set of best practices for the industry.

Workshop at LEAD

In just two weeks, a select group of industry thought leaders will come together to explore how to make this ambitious agenda a beneficial reality. They will be participating in a pre-conference workshop at the LEAD Marketing Conference in Rosemont, IL, on Sept. 19.

The workshop is presented by the In-Store Implementation Network, a membership organization with an educational mission centered on advancing awareness and knowledge of ISI practices. The group boasts more than 1,400 practitioner members in 28 countries who share a common goal – the establishment of a culture of performance at retail that makes stores work better, shoppers more successful and businesses more profitable.

Thanks to the generous sponsorship support of our friends at Gladson, ISI Network has assembled an all-star faculty to address key facets of the opportunity. The workshop format is intended to ensure that participants will leave the half-day event with a fresh perspective and practical ideas that may be applied immediately to their own ISI business challenges. As Executive Director of the ISI Network, I will be the lead facilitator of this workshop.

A few seats remain available; admission is complimentary to retail and CPG practitioners. I look forward to greeting many of you in Rosemont!

To register for the LEAD Marketing Conference, click here.

For a detailed agenda about the ISI Pre-Conference Workshop, click here.

© Copyright 2011 James Tenser